Sears Q1 sales fall 20% but posts first quarterly profit in two years amid cuts

There was a glimmer of good news in Sears Holdings Corp.'s first quarter earnings report.



The embattled retailer reported its first quarterly profit since 2015, which it attributed largely to the sale of its Craftsman brand, and lower expenses due to its $1.25 billion cost-cutting plan. Sears posted net income of $244 million in the quarter ended April 29, compared with a loss of $471 million in the year-ago period. However, Sears posted a loss of $230 million when adjusted for special items, compared with a loss of $199 million a year earlier.



On the revenue side, Sears continues to bleed. Revenue fell 20.3% to $4.3 billion in the quarter, down from $5.4 billion last year. The retailer said the year-over-year decline was primarily driven by having fewer Kmart and Sears full-line stores in operation as well as an 11.9% drop in same-store sales.



Same-store sales at Sears stores fell 12.4% and 11.2% at Kmart. The decline at Sears were attributed to falling sales of home appliances, apparel, and lawn and garden items. Kmart declines were attributed to weakness in grocery and household items, pharmacy, apparel, and home categories.



Selling and general expenses decreased about 16% to $1.27 billion in the quarter, leading to a near-third drop in total costs to $4 billion.



“While this was certainly a challenging quarter for our company, it was also one that clearly demonstrated our commitment to return Sears Holdings to solid financial footing,” Sears chairman and CEO Eddie Lampert said in a statement. “We recognize that we need to accelerate our efforts to improve our operational performance.”



Earlier this week, Sears announced it had struck deals to extend the maturity of its debt and of some of its pension obligations, and pass off some of its pension obligations.